Sprint to Buy AAA Memberships for Customers (S)

Promotions run the gamut when it comes to the four wireless carriers but Sprint Corporation (S) may have found the most unique. On Thursday the struggling wireless carrier announced it will cover the bill for customers’ membership to the American Automobile Association (AAA).

Sprint said the offer requires a once-active phone and a AAA member number in order to get the break. Users also have the option to download the Sprint Family Locator app to track up to five phones for free. That service typically runs $5.99 a month. AAA costs around $66 a year for a classic membership and around $100 a year for plus membership and $129 a year for a premium membership. Sprint is covering the costs of a classic AAA membership.

While this promotion isn't the first time a wireless carrier in the U.S. has rolled out a promotion to lure customers from its peers, it does come just days after Sprint announced a sale and leaseback of wireless airwaves to raise much needed cash.

Sprint Selling, Leasing Back Airwaves

Earlier in the week Sprint said three wholly owned special-purpose subsidiaries have commenced an offer of up to $3.5 billion of wireless spectrum-backed notes in three series with varying maturities. The subsidiaries will acquire a portfolio of FCC licenses and a small number of third-party leased-license agreements from subsidiaries of Sprint, which comprise a portion of Sprint’s 2.5GHz and 1.9GHz spectrum holdings. It represents about 14% of Sprint’s total wireless airwaves holdings. The notes are expected to be rated investment grade by both Moody’s and Fitch. (See also:Sprint in $3.5B Spectrum Lease-Back Deal.)

In November 2015, Sprint was able to raise $1.2 billion by selling and leasing back handsets. In April it raised $2.2 billion by using network assets as collateral. Sprint is controlled by Japan's Softbank Group, which provided the financing for both of those transactions. Currently, Sprint has close to $37 billion in debt, $4 billion of which The Wall Street Journal said has to be paid next March. It ended last quarter with $11 billion in liquidity.

Sprint has been aggressively courting customers with one of its more recent promotion being a free iPhone 7 trade-in when the new device launched in September. That resulted in record preorders and, unlike its peers, it's expected to keep the promotion running through the fourth quarter. Sprint leases its phones and equipment rather than finances it so it doesn’t feel as much of a gross margin hit as its competitors. (See also: Sprint's Good Reasons for iPhone Upgrades: Cash.)

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